As Aussies navigate through the complexities of managing finances, everyone's keeping an eye on government decisions that could help put extra cash in everyone's pockets.

With the Federal Budget proposal lodged, a recent decision got many Aussie seniors talking, as this could affect them significantly.

The government recently confirmed that deeming rates will remain frozen for another year.

This freeze was a part of the 2025 Federal Budget.

Around 460,000 pensioners may see the effect of this freeze, with an estimated $450 million staying in pensioners' pockets to help combat the rising cost of living.

Many Australians are keeping an eye on this year's Federal Budget as the elections loom closer. Image Credit: Budget Australia

Deeming rates are a critical factor in the calculation of Centrelink payments for pensioners.

These rates are assumed rates of return that the government applies to a person's financial assets—including shares, superannuation, and bank accounts.

If any of these assets earn more than its supposed deemed rate, the additional income may not be counted by the government when determining pension payments.

This rule could make a significant difference in how much pension seniors receive.

As of writing, the lower deeming rate is set at 0.25 per cent. Meanwhile, the upper rate is set at 2.25 per cent.

These rates have been in place since May 2020 and have traditionally followed the Reserve Bank of Australia's cash rate, which is currently at 4.10 per cent.

However, the government recently decided to keep these rates despite the cash rate increases.

Freezing deeming rates was first implemented by the former Coalition government in 2022.

For two years, these rates were frozen as a cost-of-living measure.

The Labor government then extended this freeze last year, and it should last until 1 July 2025.

This freeze could impact the Federal Budget—a one percentage point increase in deeming rates could save about $1.8 billion over four years.

For single pensioners, the first $62,600 of their financial assets are subject to the lower deeming rate of 0.25 per cent.

Any amount over this threshold is deemed to earn 2.25 per cent.

For couples where at least one person is receiving a pension, the first $103,800 of combined financial assets are deemed at the lower rate, with the remainder at the higher rate.

These thresholds are indexed every 1 July to reflect increases in the cost of living.

See how several key figures are reacting to the Federal Budget here:

Source: 9 News Australia/YouTube​

In addition to the freeze on deeming rates, the Labor government also made several promises that could further ease pensioners' financial burden.

These promises included a pledge to reduce the price of PBS-listed medicines to no more than $25 and a substantial energy bill relief, among others.

As Aussies continue to see the implications of the 2025 Federal Budget, it's crucial to stay informed about how these changes may affect you and your living situation.

Key Takeaways

• The government will be freezing deeming rates for an additional year, which could benefit about 460,000 pensioners.
• The decision was part of the 2025 Federal Budget measures to assist senior Australians with the cost of living.
• The current deeming rates, which have been in place since May 2020, are 0.25 per cent for the lower rate and 2.25 per cent for the upper rate.
• The freeze on deeming rates is said to be costly for the budget, potentially saving pensioners an estimated $450 million a year.

What do you think of this update? Will the freeze on deeming rates make a difference, or is it not enough to keep up with today's living conditions? What changes did you want to see in the Federal Budget? Share your thoughts and opinions with us in the comments section below.

 

[Sherril54]

The majority of those employed there are as useful as Tits on a Bull....they ask for the same information you have already supplied over & over. After stating i have lived in my current home for over 20 years They asked me do you still live at this ....... address, My answer was..Are you serious when i lived there my children where 9 & 7 yrs old they are now 44 & 42, & now i have 5 grandchildren. Then they asked me do you still work for this company...... My response was in 2019 i gave you people a Separation Certificate & applied for a Health care card as i had Retired...My request for that was denied! The reason they gave me was...Your wife is earning $32.00 an Hour ? Can you believe that ? i have worked very hard all my life & paid my taxes all that time and that's how they treat you. Any how when the interest rates kept rising i had to find a casual job just to be able to survive & try to pay our bills, i am still working now casually. After i reached 67 in January 2025 i then applied for an aged pension . last week i got emailed that my Pension has been approved and i will receive $655.00 a Fortnight...and have to continue to report my income fortnightly. My body is falling apart, and just recently my wife has been deemed T.P.D. & CANT WORK AGAIN..Now we are trying to get some assistance from Centrelink. she is 62..Who will employe her with Disabilities. In the mean time we hopefully wont starve to death or lose our house! this is Total B.S.

Sorry that you and your wife are experiencing this humiliation. When I needed help, there was no real interest, no experience, judgment, they had security at the door and walking around the office. Such an unfriendly place to visit, (as if you want to be there in the first place). If you need help make sure you make their lives uncomfortable and don`t give up, I felt so uncomfortable asking for help and why?? Like you and your wife worked hard and paid tax so that there would be security net in place in case of hard times.

 

[Milica]

If you work, you should only pay Tax on the money that you get from employment, not add your pension amount, into your taxable Income.

The ATO does add your pension on to the amount of monies that you get from employment - it is deemed part of your yearly income and therefore is taxed as a taxable income.